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What's the point of having a childcare subsidy if under-pressure creches are just going to raise fees?

Many creches across Ireland are increasing their fees in parallel with the introduction of a new €20 weekly subsidy aimed at easing the financial burden on parents.

shutterstock_341582660 Source: Shutterstock/SpeedKingz

A NUMBER OF creches around Ireland are introducing a hike in fees at the same time that a new childcare subsidy is due to take effect.

The More Affordable Childcare Scheme officially kicked in last Friday 1 September, with a non-means tested parental subsidy of €1,040 (or €20 per week) due to be introduced on all participating creches’ fees.

At the same time, however, it has emerged that many creches are concurrently raising their fees, thus either partially (or in some cases fully) taking advantage of the subsidy for themselves.

TheJournal.ie this week heard from three families in the greater Dublin area who have seen their fees rise at the same time they have signed up for the new subsidy.

However, creches are adamant that the situation is not one of their creation, and that it is understandable that some may take advantage of the scheme given their own rising operating costs.

‘Not one bit impressed’

Emily is based in a suburb on the north side of Dublin city, with her daughter placed in a local creche. She recently received word that the creche is to raise its fees by 8%.

“We were waiting for the reduction in September. Then we went into the creche recently and were told that the fees were going up at the same time. I’ve a friend in Swords and it’s an 8% increase there as well,” she told TheJournal.ie.

The subsidy is calculated on a pro rata basis, ie parents will save depending upon how long their child spends in creche. For Emily, after the business raises its fees, the savings her family will see amount to less than €2 a month:

It’s a complete pain. We budget every month, we only bought our house last year, and we were able to take into consideration with this that we would get at least a bit of a reprieve. And now to have that taken away with six weeks’ notice…

“It’s not like we can just shop around – my daughter is settled in her creche, she knows the people, the other children and the environment. We’ve built trust with the staff – it’s not the same as changing your electricity provider,” she adds.

Her story is replicated at various creches across the northside of the city and into Co Dublin.

cc1 An email received by parents of children enrolled at one north Dublin creche in recent weeks, informing them of the introduction of the subsidy and an increase in fees at the same time

Click here to view a larger image

Karen’s 22-month-old toddler has been attending creche in a town in the north of the county. Recently, she received a letter from the service saying that fees were set to increase by 7.5%.

“We were paying €979 a month, now it’ll be about €967, so we’ll have a whole €12 to work with after the subsidy,” she says.

She says that the payment was “put in place to help parents, but it’s not going to, it’s just going to the creches”.

“From the creche’s point of view, they say it’s an increase to benefit their staff, many of whom have been with them from the start. But it’s not very helpful for us.”

Gavin’s child is based in another creche in the same town. He recently received an email informing him both of the introduction of the subsidy and of the fact the creche would be raising its fees by roughly 4%. That will see his family save €40 per month on what they paid previously.

“It should be another €40 cheaper on top of that,” he says.

“We applied for the subsidy though the creche, they took all our details, emailed us to say we’d been approved and said they were raising their fees at the same time.”

And how does he feel about it? “We’re not one bit impressed.

They said it’s to do with insurance costs and the like, but it just looks like they’re taking the opportunity to put a bit of money in their own pockets to be honest.

“I understand they’re loss-making,” says Emily of Irish creches. “They’re not doing it to line their own pockets, they’re struggling. But this was supposed to help parents.”

What’s going on with childcare?

The universal subsidy scheme discussed above, which is applicable to all children aged between six months and three years, works by having parents sign up for it – with their creche as intermediary. The creche itself has to officially register itself with child and family agency Tusla first, with an end goal of reducing the number of businesses operating in a non-official capacity.

From there, once a family is approved, the €20 weekly subsidy should be removed from their bills, with the government then reimbursing the creche.

Childcare Awareness Campaign Minister for Children Katherine Zappone Source: RollingNews.ie

The subsidy forms part of the More Affordable Childcare Scheme, as it is now known (previously it was the Single Affordable Childcare Scheme), one of a series of early-years measures announced by the government in last October’s budget, with €19 million allocated to facilitate its introduction.

The overarching Affordable Childcare Scheme (we know, it’s confusing) itself which was announced in the budget was to include further means-tested subsidies for children aged between six months and 15 years. As of April of this year that scheme has been delayed, with no clear endgame in sight, due to the complexities with introducing a computer system to handle online applications (a government spokesperson this week told us the system “is still in development”).

All told, €465 million was allocated in early-years funding in the budget, an increase of 35% (€120 million) on the previous year. But creches we spoke to argue the level of investment in the service they provide is insufficient – hence why the introduction of the subsidy has seen many of them raise their fees.

Overheads

Early years services in Ireland have been struggling to survive in recent years, particularly in Dublin, with increasing costs, competition, and the introduction of parent-friendly regulations such as the ECCE (Early Childhood Care and Education Scheme, which provides two years’ free preschool education for children aged between three and five) taking their toll on businesses’ balance sheets.

One woman operating a creche on Dublin’s northside (who is keeping her fees unchanged) said that signing up to the subsidy scheme is “worth it”. However, she added that the administration required by each creche in order to make the scheme operational has made work “absolutely crazy” in recent weeks, something that is making childcare providers angry.

“It’s worth it because all parents want to sign up for it, so it’s something that you have to offer them I think,” she says.

But the last two weeks have been absolutely crazy trying to get everything in order. The government has put it all on the creches. We were at a childcare conference recently and the level of anger from providers, you could really feel it. We already have to chase people for fees, and now we have to chase them to get this scheme in order as well.

“It’s a really tough business to be in at the moment,” she adds. “There are huge overheads, and something like this is very difficult to handle, particularly for a business like mine where I’m handling it all on my own.

shutterstock_341582612 Source: Shutterstock/SpeedKingz

I’m not raising my fees, but to be honest that has a lot to do with me not thinking of it. I can certainly see why a creche would.

Mary O’Neill, meanwhile, runs the Fairyhouse creche, catering for about 100 children, in Clarinbridge, Co Galway. She argues that the subsidy, and the Affordable Childcare Scheme, “doesn’t go far enough at all, not even close”.

“They (the government) haven’t tried to listen to us, they’re just bringing in things thinking they’re fixing a situation without taking our point of view. We know how to run our own business after all. Even if it was done through the parents’ taxes it might have made more sense,” she says.

“Why did they decide to do it they way they did?” agrees Emily. “A tax credit would have made far more sense. At least then the creches wouldn’t have had to go to the department themselves for their own subsidy.”

O’Neill says that administering the new discount “isn’t difficult, but it is time-consuming”. “We’ve designed our own form for the parents to fill out to try and streamline it. The government helped with that when it came to the ECCE but with this one we’ve been left in limbo.

We’ve got a lot of phone calls from parents asking are we putting our fees up. There’s anger at businesses that are doing so. We’re not doing that. But I can fully understand why a business would. I think a lot of creches under pressure are raising the fees to get the benefit of the subsidy without putting the parents out. I don’t agree with that personally, it’s supposed to be for the parents, but I can understand it. Creches are really suffering, especially sessional ones (those that run the ECCE alone).

What the government is saying

The whole situation is one of need on both sides – parents are struggling to pay fees of on average about €1,000 per month around the country (prices outside Dublin seem to hover between €650 and €800 per month), and creches are struggling to survive in a business which is increasingly regulated. The creches we spoke to argue that government investment needs to increase to sort the situation, and drastically.

The government has likewise been criticised for saying it is not in a position to dictate what private businesses can charge, with Dublin Solidarity TD Ruth Coppinger asserting recently that “this light touch regulation approach is simply not acceptable to parents who are already struggling with the rising cost of living such as rocketing rents and high mortgage payments”.

“The minister should take action immediately to stop any childcare providers taking advantage of the subsidy and increasing fees. Standing back with a laissez-faire attitude is not acceptable to parents,” she said.

As regards creches raising their fees, a spokesperson for the Department of Children and Youth Affairs meanwhile told TheJournal.ie that “we are monitoring the situation”.

“Early Childhood Ireland, which represents over 3,500 of early years providers conducted a survey recently which stated that approximately 80% of respondents did not intend to increase their fees and those that indicated that they would were in the region of 5%,” they said.

Regarding the suggestion of a lack of consultation on the government’s part with childcare providers, they said that such consultation has been “extensive… regarding the measures being rolled out”.

Information packs were sent to every childcare service in May, information roadshows hosted by the department were attended by over 1,000 childcare practitioners and local authority childcare committees have also hosted sessions and supported services on a one-to-one basis. A standalone website has received over 400,000 hits from over 100,000 individuals and has been advertised widely online, in print media, on Dublin bus and on billboards throughout the country as well as on radio.

Quinn Marian Quinn Source: Rollingnews.ie

As regards the additional administrative burden placed on creches by the new universal subsidy, the spokesperson described registration for the scheme as “a simple process” and added that the department has paid €14.5 million (about €28 per student registered) to participating businesses for time spent administering the schemes, with a further €3.5 million due to follow in the coming months.

Massive concern

Marian Quinn, chairperson of the Association of Childhood Professionals (ACP), argues that it still isn’t enough.

“We’ve had massive concern from the very start,” she told TheJournal.ie. “We’ve been calling for years for more investment to meet costs.

There have been massively increasing costs in recent years, and fees have to rise with that going on, it’s inevitable.

Quinn says the situation amounts to “catch 22 – damned if you do, damned if you don’t”. “If you don’t sign up to the scheme you don’t raise your fees, but then parents want to know why you haven’t signed up. If you do sign up, you have to raise your fees to make it worthwhile,” she says.

“It’s pitting parents against providers. The reality is that if creches were charging what they really need to do to survive, then fees would be far higher. And if the government just paid the parents directly then fees would rise anyway.

“There’s a problem with calling it ‘affordable childcare’ – it doesn’t reflect reality.

Parents need a break, so it’s unfortunate that costs are going up. But the reality is that state investment isn’t adequate at present. Like I said it’s unfortunate, but the consequences of it are inevitable.

Read: ‘A tragedy’: Investigation launched into the death of a homeless man sleeping rough in Dublin

Read: An average of 12 phones are seized in Irish prisons every week

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